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Fiscal Stimulus and Household Debt: Evidence from Thailand’s First-Car Buyer Tax Rebate

Athiphat Muthitacharoen () and Krislert Samphantharak
Authors registered in the RePEc Author Service: Sommarat Chantarat ()

No 60, PIER Discussion Papers from Puey Ungphakorn Institute for Economic Research

Abstract: This paper studies the impacts of Thailand’s 2011–2012 first-car tax rebate scheme on household debt using the account-level loan data from National Credit Bureau. While the literature mostly concentrates on the macroeconomic effects of such stimulus, this study focuses on the effects on individuals who borrow to finance their durable-goods purchases. We show that the program led to higher delinquency on loans and crowded out other loan originations. Our findings are consistent with the demand-shifting mechanism—the rebates encouraged participants to purchase their cars very prematurely. The results were more adverse for passenger car buyers than for truck buyers. We also find local spillover effects of the program on non-auto loans and on individuals not participating in the program.

Keywords: Fiscal Stimulus; Tax Rebates; Durable Goods; Household Debt; Delinquency; Credit Bureau Data (search for similar items in EconPapers)
JEL-codes: D12 E62 E65 H31 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2017-06
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